Central Bank Governor Dr Delisle Worrell sees a doubtful outlook for Barbados’ economy.
By Stacey Russell
Central Bank Governor Dr Delisle Worrell sees a doubtful outlook for Barbados’ economy.Worrell also says the economy is likely outlook for Barbados’ economy, which he says is likely to feature unemployment, increased inflation and marginal growth in real output to year-end. In his review of the first six months of the economy for 2010, he said, “The remainder of the year is clouded in uncertainty, about the strength of the recovery in Barbados’ main tourism markets, about the prospects for tourism globally and regionally, about future energy prices in the wake of the oil spill in the Gulf of Mexico, and with regard to the volatility in international financial markets.”Moreover, he pointed to a six-day-old report of the International Monetary Fund (IMF) that has indicated mixed prospects of unexpectedly strong recovery in the global economy, anticipated to reach 4.6 per cent this year, on the one hand, and future devastating consequences from present international financial upheavals.“Growth rates are projected at 1.2 per cent for the UK [United Kingdom], 3.3 per cent for the US and 3.6 per cent for Canada. The IMF warns that the current increased financial turbulence will have adverse effects, however,” Worrell stated.He said future economic anxiety was also linked to “growing fears” that the US economy may suffer a double dip of recession because tight reins on state and municipal spending had cancelled the uptick driven by Federal Government spending, coupled with continuous high rates of US unemployment.Also, there were early concerns in US and Europe over debt increases that could hamper expansionary fiscal policies before they took full effect.The Central Bank Governor said: “The imposition of an airline passenger tax by the UK government is another possible difficulty in the path of recovery for Barbados’ tourism. Growth in Barbados’ real output in 2010 is still expected to be marginal, and unemployment is unlikely to be ameliorated before year-end. There may be an increase in energy prices, which would result in a rising tendency in the inflation rate.”In the circumstances he said Government would focus on safeguarding foreign exchange reserves and Barbados’ external credit rating through fiscal consolidation.“It is essential to maintain macroeconomic stability and a balance of foreign exchange outflows and inflows, so the economy remains poised to take early advantage of recovery in tourism demand and other foreign exchange earning activities,” Worrell concluded.